LPC - Minimum Wage Apprentice Exemptions Review

LPC - Minimum Wage Apprentice Exemptions Review

The TUC welcomes the LPC's review of the existing exemption of apprentices from the national minimum wage (NMW). Currently, apprentices under the age of 19 and older workers in the first year of an Apprenticeship are exempt from the NMW. In England only, there is a minimum floor of £80 per week, enforced through contractual arrangements between the Learning and Skills Council and providers.

The traditional union view of the apprentice wage bargain has been that it is acceptable to exchange lower pay for apprentices in the short-term for valuable training that leads to a secure job and higher pay later. This was the rationale upon which the LPC originally decided to exempt apprentices from the NMW. There has also been a view that apprentices in their first year could be less productive than other workers. However the new face of Apprenticeships is often very different to the traditional model and these changes need to be reflected in the pay and protections available to all apprentices. Many apprenticeships are now very short, and three in five apprentices are aged 16-18. Therefore the TUC estimates around 70 per cent of apprentices are exempt from the NMW.

The submission outlines the TUC view that these exemptions are unfair, as there is a lack of enforcement and a minority of employers use the exemptions as a loophole to pay low wages. The exemptions also keep some apprentice pay too low and impact adversely on completions. In addition, the relationship between low pay and gender is highlighted, as Apprenticeships suffer from one of the biggest gender pay gaps in the economy.

The submission demonstrates the link between pay, quality and completion rates, including the need for apprentices to be able to afford to complete their programme. Removing the exemption and paying a decent rate will raise quality and completions and help narrow the gender pay gap in Apprenticeships. The submission sets out the following recommendations:

Recommendation 1:

The LPC should recommend that the current apprentice exemption from the National Minimum Wage (NMW) Act be removed

Recommendation 2:

If the LPC both agrees the principle of including apprentices under the NMW Act protection and decides to press ahead with recommending a rate, the TUC argues that there should be an apprentice rate which is set to reflect the NMW initially with a modest discount to recognise the training element of the programme;

Examples of what the rate might look like are also included in the submission. The TUC is mindful of the Government's objective that there should be 500,000 quality Apprenticeships on offer by 2020. The TUC is also aware that the sectors that young people's jobs and training opportunities are concentrated can be particularly sensitive to the wider economic climate. The TUC believes that the rate should be kept under constant review with a view to maximising the pay of apprentices without damaging Apprenticeship opportunities.

Download the full report: LPC - Minimum Wage Apprentice Exemptions Review (PDF)